On 24 July 2026 the Central Board of Direct Taxes issued a Guidance Note aimed at helping Reporting Crypto‑Asset Service Providers comply with a new reporting framework under the Income‑tax Act, 2025 and the Income‑tax Rules, 2026.
Scope and definitions
The note defines a “crypto‑asset” as any digital representation of value that relies on a cryptographically secured distributed ledger or similar technology to validate and secure transactions. The definition is functional and does not depend on labels such as “cryptocurrency”, “security token” or “NFT.” Only “relevant crypto‑assets” are subject to the reporting and due‑diligence requirements. These include all crypto‑assets other than: (a) Central Bank Digital Currencies (CBDCs); (b) Specified Electronic Money Products; and (c) crypto‑assets that the RCASP has adequately determined cannot be used for payment or investment purposes.
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Who is an RCASP (Reporting Crypto‑Asset Service Provider)
A “Reporting Crypto‑Asset Service Provider” means any individual or entity that, as a business, provides services that effect Exchange Transactions for or on behalf of customers, including by acting as a counter‑party or intermediary to Exchange Transactions, or by making available a trading platform. Unlike CRS, under which reporting financial institutions are generally entities, an RCASP may be either an individual or an entity.
Reporting framework
The reporting obligations arise under section 509 of the Income‑tax Act, with the corresponding due‑diligence and reporting requirements prescribed under Rules 241 to 244 and Form 167 of the Income‑tax Rules. The framework implements the OECD’s Crypto‑Asset Reporting Framework (CARF), created at the request of the G20 to provide a standardised, automatic exchange of tax‑relevant information on crypto‑asset transactions between participating jurisdictions. CARF addresses gaps in existing information frameworks, including the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA), which were not designed specifically to capture crypto‑assets. The framework is intended to enable tax authorities to obtain information on their tax residents’ offshore crypto‑asset activities and strengthen international tax transparency and compliance.
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Guidance note content
The Guidance Note provides practical guidance on the identification of reporting RCASPs, determination of tax residence, self‑certification procedures, controlling persons, cross‑border transactions, reporting requirements and compliance procedures. It also sets out frequently asked questions (FAQs) and illustrative examples to assist RCASPs in applying the reporting framework.
Potential impact on the crypto sector
The guidance expands India’s tax‑transparency regime beyond traditional financial accounts to include digital assets. Businesses that operate within or adjacent to the crypto ecosystem will need to assess whether they fall under the RCASP definition and determine any reporting obligations that may arise. Implementing the new requirements will likely involve a gap analysis, updating governance structures, and integrating additional data collection into existing onboarding and KYC workflows. Ongoing monitoring is essential to identify changes in user circumstances and ensure timely filing. Companies should therefore act now to put in place the necessary policy, process, and technology changes to stay compliant and avoid regulatory risk.
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Overall, the Guidance Note aligns India with the emerging global standard for crypto‑asset tax reporting, aiming to increase transparency and curb the use of digital assets for untaxed cross‑border activities.
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